By Louise Bonvechio, Treasurer and Corporate Secretary, Community Bancorp., Executive Vice President, Chief Financial Officer, Cashier and Corporate Secretary, Community National Bank
I am pleased to report that Community Bancorp., the parent company of Community National Bank, reported earnings for the second quarter ended June 30, 2019, of $2,419,298 or $0.46 per share compared to $2,002,654 or $0.39 per share for the second quarter of 2018. Year-to-date earnings for 2019 are $4,191,203 or $0.80 per share compared to $3,985,197 or $0.77 per share a year ago. Also announced during the quarter was a quarterly cash dividend of $0.19 per share payable August 1, 2019, to shareholders of record as of July 15, 2019.
The Company’s consolidated assets on June 30, 2019, were $679,538,291, a decrease of $40,809,207, or 5.7%, from December 31, 2018. Net loans decreased $11,202,064, or 2.0%, since December 31, 2018. In addition to seasonal municipal loan runoff, this decrease is also due to the early payoff of a $10 million commercial real estate construction loan, as permanent financing was sought elsewhere. This resulted in the collection of a pre-payment penalty of $440,656, which partially offsets the interest income that will be lost as a result of the early payoff.
Total deposits decreased $52,666,937 or 8.7%, since December 31, 2018, with a notable decrease in core deposits totaling $39,888,431, or 13.3%. This decrease is primarily due to the seasonal runoff of municipal deposits which decreased approximately $43 million year to date, including an anticipated runoff of a large balance account with one municipal customer in the first quarter of 2019. Increases in interest bearing transaction accounts are noted in the year-over-year comparison, while the increase in wholesale time deposits is predominantly due to the use of brokered deposits as an alternative to short-term borrowing from the Federal Home Loan Bank of Boston.
Interest income increased $1,233,563, or 17.6%, for the second quarter of 2019 compared to the same quarter in 2018, and $2,155,093, or 15.6%, for the first six months of 2019 compared to the same period in 2018. Interest expense increased $608,454, or 64.8%, for the second quarter of 2019 compared to the same quarter in 2018, and $1,278,246, or 70.7%, for the first six months of 2019 compared to the same period in 2018. The increase in interest income is due in part to the prepayment penalty noted above, as well as the increases in short-term rates. While the increase in short-term rates is having a positive impact on interest income, it is also continuing to put upward pressure on interest rates paid on deposit accounts and other borrowings.
Although net interest income was favorable, non-interest income decreased $256,023, or 15.2%, for the second quarter of 2019, and $332,992, or 10.8%, for the first six months of 2019. This decrease was primarily due to a one-time gain on sale of property of $263,118 in 2018 which was directly related to the sale of a condominium unit to the Company’s affiliate, CFSG, during the second quarter of 2018. Non-interest expense decreased $24,915, or 0.5%, for the second quarter of 2019 and increased $399,893, or 4.1%, for the first six months of 2019, primarily due to increases in salaries and wages and employee benefits.
From positive retained earnings, shareholders’ equity grew to $65.7 million with a book value per share of $12.32 as of June 30, 2019, compared to $62.6 million and $11.72 per share at the same time last year.